Question
Hello! I have a consumption life cycle problem i need help with. I need to maximize: G ( x 1 , x 2 ) =
Hello!
I have a consumption life cycle problem i need help with.
I need to maximize: G(x1,x2)=log(x1)+log(x2) , where x is the consumption in each period.
I also know that the utility function is the natural logarithm function (i.e. exp(log(x)) =x).
The next step is to set up a Lagrange function for this function, but im not sure if im suposed to use the life cycle problem or the utility function?
should i use the cosumption problem in Lagrange?
Lagrange(x1,x2,,)=log(x1)+log(x2)+(function)+(function
or use the utility function?
Lagrange(x1,x2,,)=x1+x2+(function+(function)
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